tv Your Bottom Line CNN May 26, 2012 9:30am-10:00am EDT
wealthy people pool their money together to invest in anything that can make them a profit. often they zero in on failing companies to fix them or break them apart or sell them. and as this obama campaign ad shows, that can mean layoffs. >> the support to raise a family on is hugely important. >> that stopped with the sale. >> i thought that i was going to retire from there. i had about 2 1/2 years to go. i was suddenly 60 years old. i had no health care. >> you're going to be seeing a lot of that. no surprise governor romney has a different take. he claims to have created 100,000 jobs, at least. these are the investments bain made at staples, sport authority, domino's, a lot of others. these are their success stories. and romney is touting jobs created even after bain was out of the picture, that's what private equity does, comes in, cleans up a company, sells it, or moves it forward. it's hard to measure how many
jobs bain and romney created from 1984 to 1999. bain tells us they don't record payroll numbers for deals and private equity is private. once a company is no longer publicly listed the books are closed. but today, with a painfully slow recovery should we even be talking at all about bain? >> how can you be the president with the worst unemployment record since the great depression, the longest period of deep unemployment since the 1930s, and pick a fight over job creation? >> will cain has been jumping off of his seat the past minute. >> i'm so excited to talk about this. >> as a conservative are you happy to see this election focused on this record as opposed to the president's record on jobs? >> do i look happy? i am thrilled to have this conversation over bain. i agree with the president 100%. this is not a distraction. this is what the election is about, because this is nothing short of an indictment of profits and capitalism. that is the truth, christine. >> all right. rowland martin is a political analyst. we talk about the anger in the
middle class, because of numbers like these. the congressional budget office found income for the top 1% jumped 275% between 1979 and 2007. the middle class saw income grow by just 40% during that same time. when the president chooses to bring his jobs argument back to bain, republicans claim what he really wants you to hear is that these numbers show guys like romney have rigged the game against the middle class. >> and of course he wants to have that conversation, because what will also does not want to admit is when you talk about a lot of these private equity companies, there's a difference between folks who actually want to buy a company, build it up, invest it, grow it, as opposed to go in, pile on lots of debt -- >> wait a minute, i want to go, roland, hold on. let's go back to the steel mill, the president's ad about the steel mill. steel, it wasn't really that much of a bet that steel was going to go out of business. steel and paper are the two big companies that he gets nailed
about. those were failing enterprises. many of them. and steel and paper had a really bad 20 years. not because of bain, way before bain. >> but no, no, i understand that. but look i could look at any number of companies. what i'm saying is the average person out there, what they're looking at is when these guys come in, and how they do business has a direct impact on somebody who is just a regular worker, who's trying to feed their family, pay their mortgage, and send their kid to college. and so i get the wall street argument will wants to make. but when you're one of those folks who was put out of a job, trust me, you're not sitting here going, i'll fatten your pockets but i'm the one who don't have a job. >> i get your argument, too, roland because it's been made about 100 times now that you'd like to argue that private equity and bain capital in particular has made money magically somehow by destroying companies. and you synthesize that by suggesting what they do is they go in and load companies up with debt, they fire employees, and suck out the profits. so you have to answer one simple
question if that is your premise. if bain capital did that, if that was their modus operandi why have they been in business since 1987? no debt lender in the world would continue to fund a guy like that. >> first of all, we are looking at a variety of companies in terms of how they operate. and again -- >> talking about bain. >> again, what exactly -- no, no, but here's the deal, though. we're talking about what he did in terms of various companies. and what the president is saying, which is a valid argument, is that when it has been a problem, it is open for criticism, it is open for interpretation, it is open for analysis, and so, what mitt romney's going to have to understand is, when you're the president of the united states, you don't run a private equity firm. this is a totally different deal. it's totally public versus being private. >> okay. >> it's a whole different job description. >> let me bring in joe the vice
president crossing joe the plumber. when the vice president joe biden weighed in on the issue this week. listen, guys. >> your job as president is to promote the common good. that doesn't mean the private equity guys are bad guys. they're not. but that no more qualifies you to be president than being a plumber. >> all right. will private equity firms like bane, they're not about creating profits. they're about creating -- they're not about creating jobs, they're about creating profits. that's what private enterprise does and then the theory i guess is that at the end of that there are jobs that are created. why is romney's time at bain capital relevant to this election? >> well, first of all, let me explain this also. the road to hell is paved with good intentions. jobs are not the intention of private equity. profits are. and jobs are the by-product. why does that qualify mitt romney to be president? if you listen to president barack obama and we'll use joe biden to back him up. what does a president do? president obama says he creates an equitable tax structure, clust yours for tax basis. a laundry list of things that no
human being is qualified to do when you lay it out like that. however a man that has played in the private market successfully to net job growth i think is pretty qualified to go in and get the country on the right track. >> i want to ask you each one question. roland, what kind of capitalist do you think these two candidates are? how is their capitalism different? >> i would say that mitt romney is a 100% red meat eaten capitalist, whereas president obama, as the vice president said, looks at it from the common good, say what -- how could i be concerned with a person at the top, but also the person in the middle, and the bottom, because you want to bring them up. >> i unfortunately am not as committed as roland is to believing that mitt romney is a dedicated adherent to pure market capitalism. to answer your question i think he is a social democrat in the european form. >> really? >> which means you have a very tenuous relationship with capitalism. >> hmm.
that's as close as you can get to actually saying -- all right. all right. we're going to leave it there guys. >> those are called silly talking points. >> no, no, no, that's called understanding the ideologies. >> social democrat, european model. what are you going to say next he wears armani all day? >> that's you, roland. we all know that's you in this family. >> all right, guys, have a great weekend. >> actually -- >> you keep fighting it out during the break. i got something for the college kids that's really important here. coming up in "your bottom line" just what does that diploma get you? harsh advice to the class of 2012 and to america from a former labor secretary. and governor romney says american students are getting a third-world education, calling it the civil rights issue of our time. an issue largely absent from this campaign. finally surfaces.
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how's this for graduation advice. it's the graduation address that won't be given courtesy of robert reich. members of the class of 2012, as a former secretary of labor and current professor, i feel i owe it to you to tell you the truth about the pieces of parchment you're picking up today. you're -- well you can see the word right there on the screen. or at least two letters of it. i sat down with robert reich earlier. he's professor of public policy at the university of california
berkeley. he was secretary of labor in the clinton administration. he's written 13 books including a new ebook, "beyond outrage." >> well, i would never say that word publicly, and i certainly would not give that kind of commencement address. i've given several this spring. but i did want to be realistic in print with students. because i don't think they're getting the actual truth. >> i think, you know, you're right. and i've been called by my own staff a debbie downer a couple of times for pointing out to kids that this is tough. i mean, i don't know what's worse, starting college in the heat of a financial crisis and saying boy am i glad to be in college right now and not in the real word, or graduating after a financial crisis and the opportunities aren't much better. >> the opportunities are certainly better than people who do not have a four-year college degree. and your earnings are still at least so far about 70% better than people who just have a high school degree. so, look, a college degree is still a good investment but it's becoming less and less of a good investment. and the costs of borrowing for college loans and the amount of
college loans keep on going up. >> let's talk about that a little bit. tuition at a public four-year college has risen 368% in the last 30 years and students who take out loans graduate with an average $22,000 of debt. now, if there's a job on the other end, you can pay off that debt and you can sort of absorb that tuition inflation. when there's not a job on the other end, that's where it really bites. the cost of that investment becomes so difficult to bear. >> yeah. it's not just whether there's a job. there is going to be a job. but what we are discovering is that the jobs are paying, even for college graduates, are paying less than they paid adjusted for inflation ten years ago. in fact, if you look at the economic policy institute just did a survey, just released a study showing that the typical college graduate today, the young college graduate age 21 to 24 years old, is earning adjusted for inflation about 5% less, assuming he or she has a
job, than the college graduate was earning in 2000. in the we're 2000. and if that trend continues, and it may not continue, but if that trend continues, and also the trend toward increasing college costs, and increasing costs of loans for college continues, well, at some point, college is not going to become a very good deal. >> mr. secretary, thank you for joining us. all right mitt romney has made this presidential election about the economy, even vowing to cut the jobless rate to 6%. this week, romney tackled education. a critical issue that has barely surfaced in the presidential debates or on the campaign trail. he took aim at the president, charging that under the current white house american students are getting a third-world education. >> but millions of our kids are getting a third world education. and america's minority children suffer t most. this is the civil rights issue of our era. and it's the greatest challenge of our time.
president obama has made his choice. and i made mine. as president, i'll be a champion of real education reform in this country. >> romney proposed a voucher-style system that would significant change the public school system and bring back the debate over school choice. under his proposal, low-income and disabled students would be able to use federal money to attend public schools, charter schools, and in some cases, private schools. federal funds would also be used for tutoring or digital courses. the obama camp was swift to react saying the budget romney signed into law when he was governor of massachusetts actually cost 14,5,000 teachers, librarians and police officers their jobs. if you look at romney's record on education, it's changing. he once wanted to get rid of the department of education, but changed his mind when he ran as a presidential candidate in 2007. as a candidate in 2007 he also supported no child left behind, but is now against it. he's also said president obama's race to the top competition
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the most powerful woman in text. speaking to the smartest budding minds in business at the harvard business school commencement this week and what did cheryl sandberg say about that facebook ipo fiasco? not much. she told the graduates, though, to keep in touch via facebook, of course. >> we're public now so can you click on an ad or two while you're there? >> ha. here we are, six trading days under its belt, still talking about facebook's awful debut. the story takes a new twist every day. the latest that morgan stanley is under investigation by several regulators by giving the
big guys an inside scoop before the ipo. that's the allegation, at least. leaving you, the regular guy, out. joining me is the man making that accusation, henry blodget, and ali velshi, host of your money. we're still talking about facebook. what happened here? illegal or unethical? >> so am i the guy making this allegation? >> one of the guys. >> okay. so it is clearly grossly unfair. so far morgan stanley underwriters have said underwriters have said, look, we followed all the rules, but what happened here is facebook's business appears to have deteriorated in the second quarter. facebook told the analyst at the underwriter and other underwriters about that. the analysts cult their numbers all in sync and word went out to big institutional investors, but not small investors. that's a very important peegs of information that was not shared with all, which is a definition of selective selection. >> what is it -- rules have
changed. >> that's right. i think the big picture of what's happening, when i got in trouble it was for analysts working very closely with bankers on tech ipos in the 1990s. that was the practice at the time. after the dot-com bust ellioiot spitzer came out and said, this is a silly rule, we've got to change that. arguably i was in the middle of that and got in trouble. similarly here the situation is they didn't want research to get ahead of an ipo and the field mislead by it, so research analysts can't say anything, but the thing is they can say stuff to big institutions as long as it verbally, so long as it's not in print. >> lots of people have phone calls. if you tlihink of material, youe got be able to figure out a way to invest. we're thinking this ipo's out there.
all everyone's talking about. >> but the press was reporting that revenue from computers was slowing, that people going to mobile phone devices. that's not even rocket science. that's clear. >> that's the key point. they say, look, we changed the prospectus. i read the line very closely. i'm a former analyst. it did not kmup indicate to me it was weaker than they had expected the week before and that numbers had come down. this is why people can't go buy one like a lottery ticket. >> as we see, you can certainly get in right after it and what a lot of people advise is this doesn't normally happen. what happened at facebook is an unusual event. >> highly. >> things can happen and if you let the dust set in a little bit, you may not get in on day one, and you may find out something went wrong. by the way, this may have little
to do with whether facebook is a good investment at some price. >> silicon valley is kind of laughing at us saying, come on, you don't make money the first day or second day. who's the biggest loser in the end? is it nasdaq, morgan stanley, facebook or the little guy. >> who got in at 42 bucks. >> who thought he was going to play with the big guys and got hurt. >> fortunately a lot of people didn't get that hurt. still overnight money, that's good, and the stock isn't down that much and facebook's a very good company so hopefully it works out fine in the end. but right now there's egg on a lot of faces from the underwriters to facebook and unfortunately the investor. >> the one takeaway from facebook, if you don't know the log-in to your 401(k), you shouldn't be doing it. i get so crazy for retail investors sun less it's for fun. >> henry blodgett and ali vel i
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>> reporter: for those looking for a job, it's a sign. >> i was looking down here. >> reporter: this billboard off i-95 outside of philadelphia, construction equipment company modern group wants the hire people just like him, veterans. he requitired from the navy aft 29 years. >> it was a bit of a shock for me. i put all the applications out there, put my feelers out there and got little response, very little response. i saw the sign out front, called the h.r. department, sent them my stuff, and the rest is history. >> reporter: that's what led him to a job as a technician here. >> my first job -- i'm 47 years old -- happened at modern group. it's a chancht definitely a change. >> reporter: dozens of application pore in to david griffith, president and ceo. he's hired many military from
all branches. >> they tend to be more sensitive to the customer. i think there's a greater attention to detail from folks coming out of the military. >> we're all on the same team. the mission is to get the entire job done and keach this company rolling. >> there's a huge push to hire more veterans. the unemployment rate for post-9/11 veterans is steadily improved. 9.2% in prapril, but it's still higher than the national average. time warner, the parent company of cnn. already this year, 12,000-plus vets have been hired. the fields that have been hiring? government, tech. >> if we can do it in such a way that we can hire these young men and women and bring them on board and do good for our company and our stakeholders, i
can't imagine why i wouldn't do it. >> when you're dealing with the military, it's nothing more than a snapshot society anyway. coming here and working with these guys, i think is a perfect transition. >> enjoy your memorial day weekend, everyone. my blog this week is about the healing housing market. check it out for vooisz. did you know mortgage rates are at record lows again? we're on facebook and twitter. at cnn "bottom line." back now to "cnn saturday morning" for the latest headlines. have great weekend, everyone. -- captions by vitac -- www.vitac.com after three decades, a cold case may be solved. 33 years to the day after the 6-year-old disappeared. and exonerating after five years in prison for a crime he didn't commit. i'll ta